Twitter purges fake accounts, shareholders purge their Twitter stock

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FILE – This Oct. 26, 2016 file photo shows a Twitter sign outside of the company’s headquarters in San Francisco. A new study published Thursday, March 8, 2018, in the journal Science shows that false information on the social media network travels six times faster than the truth and reaches far more people. (AP Photo/Jeff Chiu, File)

Not even a raft of tweets Monday from President Donald Trump about everything from his upcoming Supreme Court justice nominee to drug companies raising their prices was enough to allay concerns that Twitter’s user growth is at risk, following a report that it has purged millions of fake accounts from its service.

Twitter’s shares ended the day down by 5.4 percent, at $44.14. The decline followed a Washington Post report last Friday that said the company had removed 70 million accounts during May and June that were determined to be either fake or malicious.

When Twitter reported its first-quarter results in April, the company said it had 336 million monthly users during the first three months of the year.

The possibility that Twitter may have stripped nearly 21 percent of its acknowledged user base was enough to send fear into investors Monday, as Twitter’s shares fell nearly 10 percent shortly after stock trading began. However, comments from Twitter Chief Financial Officer Ned Segal managed to at least quell some of the market’s apprehension about the company’s user numbers.

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In one tweet, Segal linked to the Post story, saying, “Some clarifications: most accounts we remove are not included in our reported metrics as they have not been active on the platform for 30 days or more, or we catch them at sign up and they are never counted.”

Some clarifications: most accounts we remove are not included in our reported metrics as they have not been active on the platform for 30 days or more, or we catch them at sign up and they are never counted. https://t.co/nRIGE9EMcf

Segal then went on to, in effect, try and calm investors down about the numbers reported in the Post’s story, saying, “If we removed 70M accounts from our reported metrics, you would hear directly from us. This article reflects us getting better at improving the health of the service. Look forward to talking more on our earnings call July 27!”

If we removed 70M accounts from our reported metrics, you would hear directly from us. This article reflects us getting better at improving the health of the service. Look forward to talking more on our earnings call July 27!

Still, CFRA Research analyst Scott Kessler cut his rating on Twitter’s stock to sell from hold, saying the shares appear to be “overvalued.” Kessler also cited the Washington Post report on the grounds that even if Twitter didn’t remove 70 million accounts over the past two months, the company at least cut out enough fat to raise some eyebrows about its ability to grow its user base.

“Twitter had 336 million monthly active users (in the first quarter),” Kessler said in a research note. “We wonder about potential negative impacts on (Twitter’s) pricing and revenue.”

Rex Crum is the senior web editor for the business section for The Mercury News and Bay Area News Group. He also writes about business and technology for the publications' print and web editions, and has covered business and technology for nearly two decades. A native of Seattle, he remains a diehard Seahawks and Mariners fan and is imparting his fandom to his Oakland-native wife and two young daughters.